Liberty Toolbox didn't work for me either and I even went to the market to install. I ended up having to go into terminal emulation and editing the files using vi. Had to look up how to use that again!
Thanks, Jboxen! Also, really liked the blog you linked in your post.
Care to explain what you did via Terminal? I'll update the OP with it in case others want to go that route.
After mounting the system RW, going in to terminal emulation, at the prompt:
vi /data/liberty/init.d.conf
Now, vi is an old school text editor so you have to maneuver around using the following keys because we have no cursor keys in droid:
j = move cursor down one line
k = move cursor up one line
h = move cursor right one character
l = mover cursor left one character
Right now you are in vi's command mode. This allows you to move around and issue commands like save, undo, quit, etc.
Find the line that says:
SYSCTRL=0
Move the cursor so it is sitting right on top of 0 and press r which means to replace the character underneath the cursor and type 1.
Save the file and quit back to the prompt by typing :wq (you will actually see this command typed at the bottom of the editor)
Once back at the prompt, to edit the other config file:
vi /etc/sysctrl.conf
If was easier for me to delete all the lines in there and type everything in so typing dd deletes one line at a time.
Once all the lines are deleted, press i which means start inserting at the cursor. This puts you into edit mode in vi. Type in the following lines as detailed by Jboxen in his post:
vm.swappiness = 0
vm.min_free_kbytes = 4096
vm.dirty_ratio = 90
vm.dirty_background_ratio = 70
vm.vfs_cache_pressure = 1
vm.panic_on_oom = 2
vm.oom_kill_allocating_task = 1
kernel.panic = 5
kernel.shmmax = 2268435456
kernel.shmall = 16777216
Once you are done, we need to get back into command mode by press ESC. Since the keyboard doesn't support the ESC key, we need to change a setting in terminal emulation. Hit the menu button | Preferences | Control key. I changed mine to be Vol Down. Pressing Vol Down and then 1, gets me back to command mode. Type in :wq to save and quit.
After that reboot, go back into terminal emulation, check your work by typing:
sysctl -a | grep vm
If you screw up editing your files at any point and want to abandon your changes in vi, press ESC (in my settings it's Vol Down and then "1"), and type in ":q!" (minus quotes obviously)
Damn, the instructions were longer to type out than I thought!
Anyways, you can find more info on vi commands
here.